I have a soft spot for books on frugality, so when I spotted America’s Cheapest Family on the new releases shelf at my local bookstore, I had to read it. Are there a lot of good ideas inside for how to reduce your financial footprint, or is it a bunch of self-promotion and hot air? This week, I’m going to dig into this book and find out whether it’s worth your time.
The full title of this book is actually America’s Cheapest Family Gets You Right on the Money: Your Guide to Living Better, Spending Less, and Cashing in on Your Dreams, an overly wordy title that does actually get the point of the book across pretty clearly. In a nutshell, it’s a lifestyle guide to frugal living, one that I was happy to see come out because there simply aren’t that many strong books on frugality.
Right off the bat, the entire purpose of the book is laid bare, as it gives you three principles for getting you right on the money:
Avoid debt like the plague Debt means that you take your hard earned money and just hand it to someone else in exchange for nothing but instant gratification. Rather than using credit to buy things, you should save up the cash and let the interest work in your favor, not in the favor of some banker willing to lend you money – and take back even more money.
Live below your means This book believes strongly in the concept of the written budget, something I’m not wholly sold on. However, I do agree that you should spend less than you take in every month, and the greater the difference between the two numbers, the better off you’ll be in the long run.
Embrace the thrifty lifestyle The authors pitch living thrifty as being like a game, one in which savings in time and in money are the prize. Every time you can do something that saves you money or time, you’re winning, even if it seems like a pain to get started. I agree: that kind of attitude will win some serious rewards over the long run.
Spending Some Time With America’s Cheapest Family
In each chapter, I’m picking out a “best” tip. This isn’t the most money-saving item in the chapter, but the one that stood out to me as being quite interesting.
Chapter 1: America’s Cheapest Family
The first chapter is basically just an introduction to the book and to the general idea of frugality and how it fits into the overall scheme of personal finance. Some of my readers eschew the concept of frugality for various reasons, mostly because it’s not fun and it doesn’t get you “rich.” Well, if you’re interested in getting rich rather than getting your finances healthy first, this book probably isn’t for you. As for the “not fun” part, I agree with the authors that it can be quite fun if you turn it into a game where you win if you figure out ways to save a bit of time or a bit of money, and all of those little wins add up to some serious cash over time.
Best tip in the chapter: If you actually buy a book to learn from it, don’t be afraid to mark the thing up, take notes, etc. I generally find that if a book is good enough for me to want to do this, it’s a keeper, one that I’ll probably return to several times in the future, and it becomes more valuable for me if I do that. This book has huge outer margins so that you can scribble notes all over the place, something I actually did in places.
Chapter 2: Groceries – Savings by the Bagful
The real frugal advice begins in chapter two. An average family of four in America spends $8,513 a year on groceries, about $709 a month, or $177 a person. If that same family could knock out 20% of their food bill, they could bank $1,702 a year.
It turns out that the biggest money gobbler in the grocery store is impulse buying – things that people buy that they didn’t plan for when they walked in the door. Their biggest tips for reducing that are to reduce the number of trips you take to the store to as little as once a month (they recommend starting off with just weekly visits), careful meal planning so that you know what ingredients you need, the development of a shopping list from that meal plan, selecting coupons that match the shopping list, and making and utilizing leftovers for future meals. As for us, we actually use Excel for our meal planning and ingredient listing, but we often end up assembling our actual grocery list by using Remember the Milk.
Best tip in the chapter: Buy bread at a bread outlet store and stock up big when it’s cheap (even freezing excess loaves). I wish we had a good bread outlet nearby; we have one, but every time I visit they’re either basically empty or their prices are almost the same as the grocery store, so it’s not worth the time.
Chapter 3: Budgeting – The Cornerstone of Family Finances
I basically believe that religiously following someone else’s budget plan is a sure way to failure, and I basically advocate that when people start out on the road to financial recovery that they not create a budget for a while, but instead look at ways to reduce spending and also record every single dime they spend for a while. Thus, when I read the title of this chapter, I expected to disagree with much of the content. Interestingly, the authors actually agreed with my philosophy for the most part – they don’t present a ready-made budget for people to follow, but instead guide people towards how to create your own budget. It’s very straightforward, but it’s a good “how-to” for budgeting if you’ve never built one for yourself before.
Best tip in the chapter: If you make “guesses” to estimate how much you spend on a category in a given month, it’s usually way off. I know this was true for us – we overestimated our food spending, but vastly underestimated our entertainment spending. It became clear very quickly where we needed to trim some fat.
Chapter 4: Cars – Cutting Car Costs
It boils down to this: buy a late model used car, pay cash if at all possible, and never lease. Basically, the general philosophy is that you keep driving a car until you can write a check for the next one, then sell off the old car (don’t trade it in). This method basically ensures that you’ll maximize your dollars with a car and you’ll always have flexibility and options. For me, I have no personal qualms with driving my current vehicle into oblivion, and until then I’m parking some cash away to pay for the next one.
Best tip in the chapter: If you’re trying to sell your own car, park it on a busy street corner with a “For Sale” sign in the window and information. It’ll sell quickly. Just make sure it won’t get towed.
Chapter 5: Housing – Home Sweet Home
The first part of this chapter deals briefly with the home purchasing process, but the meat of this chapter is written directly for homeowners, juggling property taxes, home improvements, and the like. Their general advice is to pay off a home as quickly as possible, something I find myself agreeing with more and more as our home purchase draws closer. Owning a home and no longer having monthly housing payments makes life a lot easier and gives you a lot of flexibility.
Best tip in the chapter: If you’re looking at getting central air installed, the best time to bid is in the late fall, when business is really slow for air conditioning dealers. You can often get an amazing deal because it’s so out of season.
Chapter 6: Utilities – Shut the Door, Turn Out the Lights
The Department of Energy reports that the average American home spends 6%-12% of their gross income on utilities. That’s a lot of cash; even a 10% reduction in utility usage could save you 1% of your annual gross income. The chapter is split up into several subsections, each focusing on a particular utility: electricity, telephone, water, and so on. Most of them are great tips, but a few are kind of quirky: one family has a programmable thermostat that basically just turns on their central air at 5 AM and runs it nonstop until 9 AM, which is when the utility company raises the rates for the day to the higher daytime usage rates. At 9 AM, it goes off until the next day at 5 AM. During the day, they leave ceiling fans on to keep things as cool as possible, then in the evenings they cool off with a cold swimming pool or a cold shower. That’s one way to save energy!
Best tip in the chapter: Trick your toilet into saving more water by tossing a filled water bottle in the tank. My parents did this with a 32 ounce soda bottle. If you have a house with a lot of toilet users in it, this can save a substantial amount of water (multiple tanks worth over a day) and it becomes noticeable on the water bill.
Chapter 7: Debt – The American Dream Turns Into a Nightmare
This chapter features a nine step plan for escaping the debt monster. Here they are, in order:
1. Acknowledge the problem
2. Make your list and check it twice
3. Cut spending to a bare minimum (this is the tricky one, I think)
4. Put the cards away
5. Get more money (by selling stuff around the house you don’t need)
6. Earn more (ask for a raise)
7. The battle plan (like the debt snowball)
8. Communicate with creditors
9. The big payoff (plan a big celebration when you finish it)
Best tip in the chapter: If someone suggests paying for something by borrowing, just say no and wait. There is nothing in life worth going into debt for outside of education and a home. If you’re going into debt for anything else, you’re choosing to drown.
Chapter 8: Medical – Keeping Your Body Healthy and Your Wallet Happy
This chapter focuses on multiple ways to cut down on medical bills: good insurance (or at least knowing clearly what your insurance covers), prescription tricks, and preventative tips. I found the preventative tips to be the most interesting, but that doesn’t mean they pass for solid medical advice or that you won’t get sick. Mostly, it’s things like drinking plenty of water, keeping clean, and getting some regular exercise.
Best tip in the chapter: Ask your doctor for larger supplies at a time than just one month of a maintenance prescription; that way, you pay only one co-pay per period. I actually did this recently for a maintenance medication I take and my doctor wrote me one for six months at a shot rather than a month (probably because I’ve been taking it since I was two days old and he figured I wasn’t going to be stupid about it). This saved some decent money – but now I have a monster bottle on my dresser.
Chapter 9: Clothing – Looking Better, Spending Less
I really enjoyed this chapter – it offered a ton of tips for cutting down on clothing spending, from using thrift shops to avoiding items that need dry cleaning. They basically agree with my clothing philosophy: classic, basic styles that mix and match well, so you don’t need too many items to have a very diverse-seeming wardrobe. By the end of the chapter, I was ready to head out to Frenchy’s.
Best tip in the chapter: If you have kids and see an amazing deal on shoes that they won’t wear for years, buy them. When I was a kid, my folks did this once, buying a pair of Nikes that were no longer being made in 1982. I started wearing them in 1992; they had a ton of retro panache and they cost my parents two dollars more than a decade earlier.
Chapter 10: Entertainment & Recreation – Finding Fun for Free
This chapter is all about leveraging the free and cheap entertainment that’s all around you. The best starting point in your community is ing town hall and asking for a community calendar, but this chapter is loaded with tons and tons of general ideas, like going on a hike, visiting the library, or doing some volunteer work. The thing that always amazes me about these lists is that they all seem like such common sense, yet so often I won’t even think of them when I think about entertainment.
Best tip in the chapter: Buy an entertainment book at the start of summer. At that point, they’re practically giving them away, but the coupons are all still good and you can do all sorts of stuff cheap during the summer, especially if you have kids who are now out of school for the summer.
Chapter 11: Vacations – Getting Away Without Debt Regret
According to the American Express Leisure Travel Index, the average American family will spend $2,962 on their summer vacation, including airfare, lodging, and other expenses. That’s a lot of dough, and one that doesn’t have to be nearly that big (unless you’re splurging on international travel). The most obvious way to save that cash is by vacationing at home (by doing a large project instead of traveling) or near home (camping in a state or national park near you). If you’re going on a bigger trip, don’t just rely on what’s in the guides: call ahead and make sure things match up with what you read – and also ask about any discounts you can get.
Best tip in the chapter: If you’re on a long road trip and want to stop for snacks, hit a grocery store instead of a gas station. My parents used to do this when we were on road trip vacations. Not only can you select a lot better treats, it’s a lot cheaper, too.
Chapter 12: Kids and Money – Teaching Kids About Money Isn’t Kid Stuff
This chapter basically boils down to giving your children clear and specific responsibilities and only giving them an allowance if they meet those specific responsibilities. They put some additional detail into the plan, but it basically just boils down to that. Basically, it comes down to having them earn an allowance rather than just getting one, but you should also give them opportunities to earn more for doing more.
Best tip in the chapter: Don’t just give your kids a full allowance. Do some “withholdings” from it that go into long-term savings and so forth. This is something that would have made a lot of sense to me as a child if my parents had done it.
Chapter 13: Savings and Investments – It’s More Than Just Money in the Bank
Thankfully, this chapter is almost entirely devoted to one vital concept: start an emergency fund now, not later. This basically means that you should open up a savings account and start putting at least a small percentage of your paycheck in there right off the top, so that when emergencies happen, you’re not caught in a sticky financial situation where you have to dig yourself into more debt to take care of it.
Best tip in the chapter: “Life is more than the money you have in the bank, the cars you drive, and the houses you own. When you come to your last days, your investment portfolio won’t matter nearly as much as the relationships into which you’ve invested your time.” That pretty much nails it when it comes to money.
Chapter 14: Attitudes – Thinking Differently Can Change Everything
This chapter basically focuses on the frugal attitude, that the little things often make all the difference. I have a friend who is an investment banker and makes almost twice the salary I do. I spent most of a day with him and I was almost appalled at how much money he spent without thinking about it. I took some mental notes, added them up, and multiplied them by 365, and you know what I discovered? After all the lattes and sodas and thrice-weekly massages and exorbitant text messaging costs, he’s burning almost $25K a year on day-to-day unnecessary junk. That means that at the end of the day (and also considering where we each live), I’m doing substantially better than him. The point of the story? Frugality isn’t a bunch of little actions that are boring, it’s a life-affirming philosophy.
Best tip in the chapter: Don’t throw something out unless you’ve really used it all you can. If you truly don’t want it, get some value out of it by selling it or donating it for a tax break. Otherwise, you’re just wasting money for no reason.
Chapter 15: The Final Payoff
The book ends with some compelling arguments about how frugality is good for non-financial reasons: it saves time, improves relationships, sets a good example for children, helps build the economy, and is good for the environment. It’s a good way to finish off this interesting book.
Best tip in the chapter: When people aren’t thrifty, they overspend, default on their payments, and go broke. In 2005, bankruptcies cost the American public at least $200 billion. Where did that money come from? Higher payments on everything, especially loans and home mortgages. If significantly fewer people went bankrupt, lenders would be more willing to compete and drive prices lower. Thus, your thriftiness actually helps everybody with lower prices – indirectly, of course.
Buy or Don’t Buy?
I picked this book up and reviewed it because, well, there simply aren’t very many good books out there specifically focusing on frugal topics. In fact, only one other comes to mind, and I’ve been planning on reviewing that one during this 52 Books series since the beginning.
This is definitely a “starter’s guide to frugality.” Once you’ve been doing things frugally for a while, many of the tips within will seem somewhat automatic. The reason is that frugality is a mindset, and once you’ve really understood and applied that mindset, most of these ideas are almost automatic.
That being said, if the idea of living more frugally appeals to you but you are having difficulty getting started, this book is for you. Almost all of the ideas are simple, most are really effective, and taken as a whole they subtly shift your mind to a frugal mindset, which will reveal many, many more ideas as you move through life.
On the other hand, if frugality seems like a waste to you or you’re already living really cheap, this book isn’t going to do much at all for you. This book targets those people in the middle who are open to the idea but don’t really know how to start and need a bit of a push to get going. If you’re not interested, this book will seem silly; if you’ve already got a sweat-stained copy of The Tightwad Gazette, this book will seem overly simple.
I found it to be an interesting read and I can respect that it would have been a real eye-opener a year or so ago when I was first committing myself to living more frugally.
America’s Cheapest Family is the seventeenth of fifty-two books in Money360’s series 52 Personal Finance Books in 52 Weeks.